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HMRC internal manual

Construction Industry Scheme Reform Manual

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HM Revenue & Customs
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Register and maintain subcontractor: Tax Treatment Qualification Test (TTQT) - Manual TTQT check

CISR43600 Action guide contents
   

When carrying out a manual TTQT check you should also bear in mind that a return or payment may have become due just before the date of your compliance check. If the manual TTQT fails when taking into account the late submission of this latest return or payment, but would have passed otherwise you should apply a tolerance of:

  • 28 days for the most recent late payment or SA / COTAX return

and

  • 38 days for the most recent and penultimate contractors monthly return (CIS300)

This will allow time for the payment or return to be processed and logged on to the system. These tolerances must not be applied to any other obligations of the subcontractor that fall due earlier in the qualifying period. Please see examples 1 to 4 below:

Example 1

A manual TTQT check is carried out on 7 March 2009, the check reveals that the only compliance failures the subcontractor has are as follows:

  • Paper CIS300 to 5 July 2008 submitted 30 July 2008 (less than 28 days late)
  • Paper CIS300 to 5 October 2008 submitted 28 October 2008 (less than 28 days late)
  • Paper CIS300 to 5 January 2009 due by 19 February 2009 not yet logged.

Although TTQT has identified 3 late contractor returns for the applicant, as the last contractor return has not been logged and 38 days has not yet elapsed since the due date for the return, the TTQT may be treated as a ‘‘Pass’’.

Example 2

A manual TTQT check is carried out on 25th February 2009, the check reveals that the only compliance failures the subcontractor has are as follows:

  • Paper CIS300 to 5 July 2008 submitted 30 July 2008 (less than 28 days late)
  • Paper CIS300 to 5 October 2008 submitted 28 October 2008 (less than 28 days late)
  • Paper CIS300 to 5 January 2009 due by 19 January 2009 not yet logged.
  • Paper CIS300 to 5 February 2009 due by 19 February 2009 not yet logged

Although TTQT has identified 4 late contractor returns for the applicant, as the last return has not been logged and 38 days has not yet elapsed since the due date for the return, this return may be ignored. The return for January 2009 is now 37 days late, but as this again falls within the 38 day tolerance for a contractor return. This TTQT may be treated as a ‘‘Pass’’

Example 3

A manual TTQT check is carried out on 7 March 2009, the check reveals that the only compliance failures the subcontractor has are as follows:

  • Paper CIS300 to 5 July 2008 submitted 15 August 2008 (more than 28 days late)

Although TTQT has identified only one late contractor return for the applicant, as it is more than 28 days late, the TTQT must be treated as a ‘‘Fail’’.

Example 4

A manual TTQT check is carried out on 7 March 2009, the check reveals that the only compliance failures the subcontractor has are as follows:

  • Self Assessment 1 Payment on account due 31 January 2009 paid 26 February 2009.
  • Self Assessment 2 Payment on account due 31 July 2009 paid 2 September 2009.

Although TTQT has identified two late SA payments for the applicant, the first is not more than 28 days late, but the second one is more than 28 days late. The TTQT must be treated as a ‘‘Fail’’.

Also from October 2007, it is possible to run an ‘‘Information only’’ TTQT. This will not alter the payment status of the subcontractor, and no output will be generated externally from it. However, this will give you some idea whether or not a subcontractor would be likely to lose gross payment status, if a TTQT was to be run now. This may be useful to Employer Compliance officers who are undertaking an employer compliance review of the subcontractor.